This blog started off by focussing on NZ's smaller 3rd level airlines, past and present. It has evolved to trying to present some record of NZ's domestic airline operations and some of the larger charter operators, interesting NZ international airliner movements and photos I have taken around the country. Comments, corrections or contributions are welcome, Steve - westland831@gmail.com

26 January 2013

Tongan Aviation Woes

There is a saying, 'don't look a gift horse in the eye.' According to Wikipedia, the fount of all knowledge, inspecting the teeth of a horse given as a gift was considered ungrateful. It would mean that recipient is trying to see if the horse is old (undesirable) or young (more desirable). It seems the Tongan Government might well have foolishly followed the axiom according to a report from Tonga. In this case one wonders whether an established well-fucntioning airline with old aircraft is worth more than a untried new airline with a new untried aircraft...

The pull-out of
Chathams-Pacific airline and the government plans to lease out two gifted
aircraft has got businesses nervous over the uncertainty of ongoing domestic
air services and their economic reliability. At a Tonga Chamber of Commerce
& Industry members event yesterday, January 23, the
local business community expressed their frustration at Chathams-Pacific's
decision to end its service in Tonga. Questions were raised over the
reliability of a replacement locally-run airline. The meeting came eight days
after Chathams-Pacific's General Manager Noel Gillespie announced the airline
would be ending its service in Tonga, saying they had lost “business confidence
in Tonga” after discovering Government's intentions to facilitate competition
by leasing aircrafts to an alternative air service.

Short life of airlines

Former Minister of Transport,
Paul Karalus, a veteran of the Tonga's airline industry, presented a view on
Tonga's 40 years of domestic airline services, and said that Tonga has had eleven
airlines, with an average life of 3.6 years for each airline. "This is not
good on an international scale." His paper outlined the issues
to be taken into account when determing the minimum regulatory and economic
requirements, "for adequate, reliable and safe domestic air services for
the Kingdom." He criticized a Chinese-built
aircraft project for Tonga. "There has yet to be full
and total consultation of the public despite the government apparently
embarking on a major exercise in the acquisition and operation of aircraft from
the People's Republic of China. While heralded as a "grant" the
public needs to be aware of the huge call for capital that will be required to
establish a new airline, and, once operational, of sustaining its viability,"
he said. He explained how it was
important to match the aircraft type to the market for it to be economically
sustainable and profitable. "Pricing of air services is very much
dependent on an optimum match of aircraft to routes, the traffic on those
routes and the economic utilization of the aircraft chosen," he said. "Even a gifted aircraft
has numerous costs involved, not least of which is the replacement cost at the
end of its useful life."

New aircraft

Paul believed the new aircraft
the MA60 and Harbin Y12 would be a commercial failure in
Tonga because they would not meet the market needs, and the highly valued MA60 would require a lease rate that the market
could not support. He stated that the MA60 model, “being a 60 seater aircraft means that
it would operate less than 1000 hours per year; an unsustainable level for a
new aircraft, both economically and financially. Regional services could
increase this, but the cost of certification would be beyond Tonga’s financial
capacity.” A member pointed out that the MA60 was not certified in the US, UK, New Zealand or Australia.

Uneconomical

Paul added that the the
17-seater Harbin Y12 would be “impossible” to run commercially in Tonga because
it would not be able to accommodate fuel costs with lower pay loads. "Fuel costs , the minimum
fuel loads required for the sector and, now, the considerably higher body
weights of passengers in Tonga, all combine to make such aircrafts uneconomical
as they cannot carry an economic revenue payload over the sector.” Paul said the government,
"has yet to divulge its scheme to reenter the domestic airline industry.
The government has obviously been in negotiation with the People's Republic of
China to provide assistance in supporting the domestic airline industry."
He believed that a government task force had been set up "to further the
intention of government to accept a grant from the PRC of up to US$25 million equivalent for the supply for
aircraft and initial operational support." "The Deputy Prime
Minister told the House on 18 June 2012 that the task force included members
from Tonga Airports Ltd., Air Terminal Services, Palu Aviation and others to
work on the details of the project before it was brought back to the House for
final approval." But Paul believed that it had
not been brought back to the House since then. He said the project was said
to be one where government receives aircraft as gifts, "and then passes
this on to the private sector for it to be operated." Paul said this opened a number
of questions that need to be answered. "The question we now have
now in Tonga is really this: can the market sustain more than one airline and
can the economy of that one airline be improved upon to make air services more
affordable and safe? "To fully answer this
question requires a lot more thought than the simplistic idea that 'competition
results in cheaper services' when it may well be that the result will be a
spasmodic boom for the travelling public followed by a bust for the airlines. "To think that two
airlines can provide competition is probably not going to happen. The real
competition for an airline here is the ferry," said Paul. In conclusion he said,
"consideration needs to be given for where best for Tonga and Tongans to
direct local scarce capital."

Concerns

Concerns were expressed by
Chamber members over safety issues and ongoing uncertainties. One of the largest tourism
operators in Vava'u, Shane Walker, said that Chathams Pacific was the first
airline to pull out rather than go broke and he questioned their reasons. He
said that in the eight days since the Chathams Pacific announcement it had
caused over NZD$80,000 in yacht charter and
resort cancellations. "This is a Chathams decision and what follows is a
period of uncertainty." He said he was gravely concerned that the
uncertainties could lead to international tourism operators simply pulling out
of Tonga and relocating their investments elsewhere.

Real Tonga

Meanwhile, a newly formed
local airline "Real Tonga" has announced today, January 24, that it
will commence air service on March 4 after securing a lease of two Y-12
aircrafts from Vanuatu.